HCM/HR Non- Compliance: Can You Afford It?

Change is inevitable, especially when it comes to today’s business climate. This age old adage also holds true for Human Capital Management (HCM) and Human Resources (HR) departments all over the country and even the world. They are being inundated with new technologies and HR compliance demands like never before. And companies must adapt to these new developments in order to survive and thrive in their industries.

There are 6 main HR compliance areas that can trouble the modern HR manager. These are payroll, benefits, termination, employee relations, risk & safety and hiring. Non-compliance with the rules, regulations and laws related to these areas result in fines and penalties. But apart from those monetary pains there are also some hidden costs of non-compliance.

On a more positive note, HR managers are quite confident about payroll, regulations and benefits law compliance. On the other hand, employee relations, risk & safety and hiring regulations are still difficult to comply with. And non-compliance with these laws not only brings forth employee grievances as well as hazard of FLSA and OSHA violations.

The Hidden Costs of Non- Compliance

As mentioned earlier, the costs of non-compliance with HCM laws is a lot more than only the fines and penalties. Research shows that every 2 out of 3 workplace related lawsuits that go to trial are won by the employees. This means that non-complying employers may also be made to pay damages to employees hurt by their actions, or non-actions.

For example, nearly $10 million of civil penalties were charged against employers by the Department of labor in 2013. Compare this with the more than $220 million damages paid by employers only for wage and hour non-compliance. Now factor is the costs of loosing reputation and goodwill in the industry, and non-compliance seems like a devastatingly expensive proposition.